MENA: A Massive Untapped Market for Climate Tech
When 70,000 delegates gather for COP 28 in Dubai, they will do so at Expo City, the site of the 2020 World Expo, a huge sustainable development repurposed as a business, residential and innovation city on the outskirts of Dubai. Expo City is a microcosm of the blistering changes transforming the business, technology and the physical landscape of the Middle East and North Africa (MENA).
The Built Environment
Across MENA, particularly in the GCC and Egypt, construction projects worth $2 trillion dollars are planned between now and 2035, led by mega projects such as Neom (Saudi Arabia), Etihad Rail (UAE) and the New Administrative Capital (Egypt). With the end of China’s construction boom, no other region comes close to MENA in terms of the scale and ambition of this urbanization phase.
Buildings are responsible for 26% of global emissions; yet new cities and infrastructure are essential for a region with a young and rapidly growing population. Across many of these mega projects, governments and developers have made significant net zero commitments. For example, The Line, Neom’s flagship project is set to use 100% renewable energy for its 9 million inhabitants. However, the global challenge of eliminating embodied emissions in buildings remains.
Energy
For decades, MENA has been a global energy hub, leading global oil and gas production. Far from being left behind in the climate transition the region’s energy and trade status is set to thrive.
MENA receives 25% of solar energy striking the planet and its production costs 1/5th of global average. 75% of land is suitable for utility scale wind farms. Outside of China and India, the 3 largest solar farms in the world are in Dubai, Egypt and Abu Dhabi. These massive clean electricity projects are set to accelerate further.
In Morocco, the planned Xlinks Morocco-UK Power Project would create 10.5 GW of renewable generation to transmit clean electricity to the south of the UK via 3,800 km of undersea power cables. Another project in development is to lay down over 1,300 kilometres of undersea cables to export green electricity from Egypt to Greece.
As Europe strives to diversify its energy mix and decarbonize its industry, the Mediterranean region is poised to become a green hydrogen hub. With ample renewable energy resources, North African countries will see huge investments not only in renewables, desalination and electrolyzer plants, but also in heavy industries that will relocate where the energy sources are.
The Climate Risk
The MENA region is warming at twice the global average, with 4°C of projected increase by 2050. Its biggest risk areas are food and water security with increased crop water stress, drought frequency and intensity, greater risk of harvest failures and reduced water supply all predicted. In a region already highly reliant on food exports and where water security is already a major issue, substantial efforts and investments in water, food and agriculture technologies are inevitable.
The Opportunity
There is a huge opportunity to scale climate technology in MENA in the sectors where the region already has large markets. For example, the region is already a massive construction market with numerous high profile mega projects and a growing sustainability focus. Its food and water markets are also very substantial and the need to invest in new technologies and solutions will only grow as climate change accelerates.
It’s also clear that the region has a very big role to play in the global energy transition, both as a producer and exporter of clean energy. The climate imperative to decarbonize heavy industries and the expanding carbon pricing regime in the EU, coupled with MENA’s geographical proximity to Europe, gives the region a huge boost in low-carbon heavy industries.
Our Approach at Nexus Climate VC
We see MENA as a massive untapped market for climate tech. Whilst the region has already seen very big investments in mature technologies, e.g. solar power, there is still very little investment or deployment of newer, cutting-edge climate technologies. There is a dearth of climate focused venture capital funds and the levels of investment in early stage climate tech startups are extremely low. On the other hand, Europe is a leading region for climate technology innovation.
We believe MENA markets offer ample opportunities to test, grow and scale climate tech solutions and can help accelerate the journey of early stage startups from early product to international markets and global scale.
Our approach is simple: leverage the natural synergies between Europe and MENA. We will invest in founders in Europe and in MENA, tackling key sectors such as clean energy, green construction, low carbon industrial production and advanced food and water technologies. We will focus exclusively on solutions that directly reduce emissions in existing industries or replace current GHG-intensive processes with low emission ones. We will focus on science-based solutions encompassing materials science, biotech, robotics, AI and engineering.
Key to our strategy, and our added value to founders, will be facilitating their access to markets in the MENA region. We will do this through extensive partnerships to test, build and deploy their products in the region, enabling them to scale in MENA and beyond.
